United Fire Group ((UFCS)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call of United Fire Group reflected a generally positive outlook, highlighting significant achievements in net written premium and investment performance. Despite facing challenges such as increased underwriting expenses and catastrophe losses, the company maintained a constructive tone throughout the discussion.
Record Net Written Premium and Increased Net Income
United Fire Group reported its third consecutive quarter of underwriting profitability, with net written premium growing by 4% to $335.4 million. The company also noted a significant increase in net income, demonstrating resilience amidst industry challenges.
Strong Investment Performance
The earnings call highlighted an improvement in net investment income, which rose to $23.5 million. This growth was driven by a sustainable increase in fixed maturity income and favorable valuations on the limited partnership portfolio.
Improvement in Loss Ratios
The underlying loss ratio saw a notable improvement of 2.9 points, reaching 56.5%. This was attributed to strong earned rate achievement and disciplined portfolio management, with severity trends remaining stable.
Positive Trends in Core Commercial Business
The core commercial business segment experienced a net written premium growth of 6%, with an 11.7% renewal premium change and rates up by 9.7%, surpassing loss trends.
Increased Underwriting Expense Ratio
The underwriting expense ratio increased by 3 points to 37.9%. This rise was due to costs associated with the development of a new policy administration system and increased performance-based compensation.
Impact of Catastrophe Losses
Catastrophe losses added 5 points to the combined ratio, including $8.2 million of losses from California wildfires, highlighting the ongoing challenges posed by natural disasters.
Forward-Looking Guidance
Looking ahead, United Fire Group provided a promising outlook for the first quarter of 2025. The company expects continued growth in net written premium, although the growth rate may be tempered by unusual reinsurance premium adjustments. The combined ratio is projected to increase slightly, while the underlying loss ratio is expected to improve further. The company also anticipates continued strength in net investment income and has declared a $0.16 per share cash dividend.
In summary, United Fire Group’s earnings call conveyed a generally positive sentiment, underscored by achievements in net written premium and investment performance. Despite challenges such as increased underwriting expenses and catastrophe losses, the company remains optimistic about its future prospects, with a focus on maintaining profitability and growth.